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Blog - Working with clients: RFM Analysis
Customer engagement, analysis and improvement is a very important part of running any type of business. Modern marketing research shows that it costs five times less to retain a new customer than to continually acquire others.
Tradittex Solution LLC talks about the types of customers and the importance of analysing customer loyalty.
Tradittex Solution LLC talks about the types of customers and the importance of analysing customer loyalty.
Who are consumers
People who consume goods and services can be broadly divided into five categories.
Note that this is just one of many consumer classifications. It is based on psychological characteristics. There are dozens, if not hundreds, of systems for classifying customers.
People who consume goods and services can be broadly divided into five categories.
- They want the highest quality at the lowest price. They always haggle and are always dissatisfied with the quality. They do not bring in much money, but they waste your nerves. If you get a lot of people like this coming to you, think about whether you are too keen on discounts.
- people who want to buy goods and services with an acceptable price/quality ratio. They are not prepared to take the cheapest product because they believe that good quality cannot be cheap. At the same time, they are not prepared to buy the most expensive product. It is important for these consumers to realise that they are getting a good level of quality for the money they are spending.
- Customers who need the product here and now. They leave the search for a product or service until the last moment, so everything has to happen super fast: purchase, payment, delivery in one day. Or even better, a few hours.
- People who only buy for discounts. They may not really need the product, but they are willing to buy it just because the price is reduced.
- Premium segment. They don't buy on discount. They don't want to be like everyone else. These customers are willing to pay to simplify and speed up the process. It's important to them to have more time and less stress. And they are prepared to pay extra for it.
Note that this is just one of many consumer classifications. It is based on psychological characteristics. There are dozens, if not hundreds, of systems for classifying customers.
Analyse customer relationships
To grow your business, you need to pay close attention to your customer relationships. It's not just about attracting new customers, it's about keeping them coming back. If customers leave, then you are underperforming and have made a mistake in your system. This category will help you find your gaps, become more loyal and attract new customers. In addition, good customer interaction has a direct impact on a company's reputation.
One of the methods of customer relationship research is RFM analysis. It is suitable for both B2B and B2C companies. RFM analysis is the collection of data on customer activity, dividing them into groups for individual work with each. This type of analysis is based on the Pareto rule: 80% of profits come from only 20% of customers. In other words, the entrepreneur's task is to identify those 20% of the best customers and direct maximum effort to working with them.
RFM analysis helps a company to identify and decide which customers should be rejected in order not to waste time and money on them; which customers should be targeted by advertising campaigns to stimulate purchases; which customers are the best, i.e. will bring the greatest profit to the company. It is also possible to analyse the effectiveness of advertising campaigns to determine the best ones in terms of influence on certain groups of consumers.
Companies often suffer losses due to ineffective management of sales and promotions. Instead of performing RFM analysis of the customer base and stimulating regular customers, managers organise sales for new customers, wasting money.
Tradittex Solution specialists analyse the customer base and develop instructions for working with potential customer groups. Our company also offers a range of other services that will help you optimise your work, modernise your company and expand your business.
To grow your business, you need to pay close attention to your customer relationships. It's not just about attracting new customers, it's about keeping them coming back. If customers leave, then you are underperforming and have made a mistake in your system. This category will help you find your gaps, become more loyal and attract new customers. In addition, good customer interaction has a direct impact on a company's reputation.
One of the methods of customer relationship research is RFM analysis. It is suitable for both B2B and B2C companies. RFM analysis is the collection of data on customer activity, dividing them into groups for individual work with each. This type of analysis is based on the Pareto rule: 80% of profits come from only 20% of customers. In other words, the entrepreneur's task is to identify those 20% of the best customers and direct maximum effort to working with them.
RFM analysis helps a company to identify and decide which customers should be rejected in order not to waste time and money on them; which customers should be targeted by advertising campaigns to stimulate purchases; which customers are the best, i.e. will bring the greatest profit to the company. It is also possible to analyse the effectiveness of advertising campaigns to determine the best ones in terms of influence on certain groups of consumers.
Companies often suffer losses due to ineffective management of sales and promotions. Instead of performing RFM analysis of the customer base and stimulating regular customers, managers organise sales for new customers, wasting money.
Tradittex Solution specialists analyse the customer base and develop instructions for working with potential customer groups. Our company also offers a range of other services that will help you optimise your work, modernise your company and expand your business.
Ukraine, 61070, Kharkiv region, Kharkiv city, Akademika Proskury Sstreet 1, office 207